I can honestly say that I haven't worked so hard on my rental property business since I started. In the last month, I have added 12 rentals to my business which is a lot for me. I certainly hadn't planned on adding so many units in such a short period of time, but I don't like to pass up great deals when they present themselves.
At any rate, this has been a LOT of work. Starting a month ago, I had a huge duplex that needed painted so that I could rent it to a Section 8 tenant with young children. That took an entire week. Next, I turned my attention to another duplex which needed a rehab. I finally have that finished.
Things have gone crazy this month with a HUGE demand for rentals. It looks like we're going to have 7 move-ins this month!!! I worked 12 hours yesterday and another 12 hours today. The question is whether all this work is worth the result. So far, I've worked very hard for a month and in all reality, I may have to work a lot during May getting everything rented and stabilized. So, what will I have to show for my two months of hard work? At $100 per month per unit, the twelve units will generate $1,200 per month positive cash flow for the next 20 years and then a LOT more when the mortgages are paid off. In addition to the cash flow, I will do all the management and maintenance myself, which will earn me at least another $1,200 per month. So, for two months of hard work, I have added at least $2,400 per month ($28,800 per year) in additional spendable income. In addition, I've added a bunch of equity; the tenants are paying down the principal on the mortgages; the government is allowing me to depreciate the properties, and I will pick up appreciation over time. Is that worth 2 months of hard work? YOU BET IT IS!
Subscribe to:
Post Comments (Atom)
2 comments:
Mike - I know this is crazy to ask, but have you given serious consideration to the time-cost trade-offs involved doing all these things yourself? The old saying "if you want something down right, you gotta do it yourself" comes to mind, but it seems like you could have a lot more time on your hands if you either outsourced some of the work and/or created your own company (or companies) to handle it. It may even be a lucrative side business, such as creating a landscape company or PM company. Again, I'm probably preaching to the choir here, but just thought I'd ask.
BTW, do you consider PM costs in your "50% gross rents as operating expenses" formula?
Keep up the great work!
Steve,
I have no desire to pay someone to do my work. Once I get the properties stabilized, I'll go back to working 3-4 hours per day, 4 days per week. That's about as retired as I can stand to be. I certainly don't want any more time on my hands than that!!!
Yes, the 50% operating expenses do include property management. Since, I do that myself, I earn that instead of giving it to someone else.
Mike
Post a Comment